Here is another tax I just discovered. Straight from Comptroller's website. This indirectly affects mineral owners because it affects the economics of the service companies and therefore the operators of our leases. More cost equals fewer wells. For your education:
In addition to Federal (and in some areas, State) income taxes, by my count mineral and royalty owners also pay ad valorem property taxes, oil conservation taxes, and if your property produces both oil and natural gas, taxes on each of those. These are "severance" taxes, and in Texas are 4.5% on crude and 7.5% on natural gas. Notice on your next check detail that these severance taxes come right off of your check. Yes, on a gas well, you only get paid for 92.5% of the income due your interest for the product you own. So in Texas, on a two product lease, we pay five different taxes. Onl
Pay property taxes promptly to avoid late fees and double payment confusion, as they will keep mailing you bills until you pay them and the amount owed changes, and you wont know if you’ve paid or not. So pay them in the month you get them if you can, but for sure before the end of the year. Be sure and put a SASE in with the payment in order to get a receipt, copies of which you may be required to provide to lenders or if the payment does not get booked. I make the first batch right before Thanksgiving, and then the rest right before the end of the year.
TEXAS SHOULD NOT PRORATE OIL, BUT MAYBE U.S. OIL STATES SHOULD?
As you also know, proration has a long history in many States to manage waste and product costs. It may be time to implement a nationwide system in order to stabilize the industry.
I am not interested in Texas working with other governments to alter supply. I am very much interested in examining the possibility of forming an Interstate Proration Board, as detailed below. Such a system could:
1) gain the US a seat at the table with OPEC and Russia
We get our ownership information from the County's tax records. Unless very recently plugged, YOU WOULD NOT BE ON THE TAX ROLL UNLESS YOU OWNED IN A PRODUCING PROPERTY and thus you would not have received a letter from us. You need to recover any funds in "suspense" prior to selling to us.
Royalty and mineral interests are a form of real estate. There are two ways to transfer real estate from one party to another, by gift or by sale. In order for a sale to be valid, something of value must be exchanged for the property. This is something of value is known as consideration, and in our case is whatever it is we are paying you for the property.
The first paragraph of our Conveyance states: "in consideration of the sum of Ten and more dollars ($10.00) cash in hand paid and other good and valuable consideration."
The absolute best way to determine a value would be to engage an oil and gas engineering firm to calculate a market value based on assumptions about future production and product prices. These firms are mostly located in the cities you would think of as being in oil and gas country. Houston, Dallas, Tulsa, etc.
However, the results from these studies will give you a range of net present values, but will normally not provide a MARKET VALUE, which is probably what you want.
